JPMorgan sees bitcoin price reaching about $170,000 within the next 6 to 12 months

Bitcoin could rise to around $170,000 within the next six to 12 months as leverage resets and its relative volatility versus gold improves, according to JPMorgan analysts.

The analysts, led by managing director Nikolaos Panigirtzoglou, said in a Wednesday report that the crypto market has corrected by close to 20% from its recent highs, with the sharpest decline occurring on Oct. 10 amid record liquidations in perpetual futures — the largest in crypto history — followed by smaller liquidations on Nov. 3. They said the Nov. 3 event came as investor confidence was further shaken by the over $120 million Balancer exploit in the decentralized finance sector, which raised fresh concerns over protocol security.

Despite the back-to-back selloffs, the analysts said the deleveraging phase in perpetual futures now appears largely over. The ratio of open interest in bitcoin perpetual futures to market capitalization has fallen from above-average levels back to its historical norm within weeks, they noted, adding that similar patterns are visible in Ethereum markets, though the deleveraging there has been less pronounced.

“In CME futures, the opposite is true; there have been more liquidations in Ethereum than Bitcoin futures,” the analysts wrote. They added that while there have been some redemptions in exchange-traded funds in recent weeks, these were modest compared with inflows during the weeks ending Oct. 3 and Oct. 10.

“Overall, we believe that perpetual futures are the most important instruments to watch in the current juncture, and the message from the recent stabilization is that deleveraging in perpetual futures is likely behind us,” the analysts said.

Bitcoin near $170,000?

On the positive side, the JPMorgan analysts noted that the recent rise in gold volatility has made bitcoin more attractive to investors on a risk-adjusted basis.

The bitcoin-to-gold volatility ratio has drifted further below 2.0, implying that bitcoin currently consumes about 1.8 times more risk capital than gold. Based on this relationship, the analysts estimated that bitcoin’s current market capitalization of around $2.1 trillion would need to rise by nearly 67% — “implying a theoretical bitcoin price of close to $170,000” — to match the approximately $6.2 trillion of total private-sector investment in gold through ETFs and physical holdings.

The current bitcoin price is around $68,000 below JPMorgan’s volatility-adjusted fair value relative to gold, the analysts said, adding that this “mechanical exercise thus implies significant upside for bitcoin over the next 6-12 months.”

Bitcoin is currently trading near $103,000, up about 0.2% in the past 24 hours, according to The Block’s bitcoin price page.

Last month, in a similar analysis, JPMorgan analysts said bitcoin appeared significantly undervalued relative to gold, implying potential upside toward $165,000 by year-end. In August, they made a comparable projection, estimating bitcoin could reach around $126,000 by year-end. Bitcoin later hit an all-time high of over $126,200 on Oct. 6 before the record liquidation event on Oct. 10.